Gasum, Fortum & Neste in Finnish Wonderland

There are three Finnish energy companies that have the Finnish government as the main owner, and all are up to their eyeballs in fossil fuels! 

“So much for those Super CleanTech Nordics,” you may say! 

These companies have been involved in fossil fuels since time immemorial. Back in the old days, many Finnish factories were furiously busy using huge amounts of energy to manufacture paper, pulp from our forests and refine metals like steel and copper that were being mined from our land. Having Russia as a neighbour was useful because we were able to receive millions of barrels of their crude oil delivered directly to our back door by rail…

… And since we needed a refinery to secure our transport fuel supplies, the government stepped in with establishing Neste to build one.

The forestry and mining companies also needed a huge supplies of energy and the government and bigger cities thoughtfully decided to develop the energy markets with big nuclear power projects, hydroelectric dams, and fossil fuel plants sprinkled around the country. This is also a country with bitterly cold winters that can last for months so energy security is regarded to be an important public good rather than a profit maximising business. 

Now, many decades later, we still have cold winters but fewer big energy gulping industries. However, the government here always wants to be seen to be doing the right thing, and Climate Change is now a top priority – or so we thought, until Fortum, a big energy company where the government has a major shareholding, started to make new inroads into fossil fuels by deciding to buy the German company called Uniper. That was when we begun to scratch our heads and say like Alice did in her Wonderland, “Curiouser and curiouser!”

Fortum is a Finnish stock exchange company where the government is a 50.8% shareholder. It has a long history in nuclear power, hydro power, district heating, and electricity generated with fossil fuels and biomass.

A few years ago, Fortum started buying a majority interest in Uniper when its former owner, E.oN, a German utility wanted to get out of the fossil fuel business to be “Green”. This started badly because Uniper’s management was upset to have Fortum as a shareholder. They regarded Fortum to be just a smaller Finnish energy company that could not support Uniper’s grander global plans. They even questioned the merger with newspaper advertisements – asking why would a company like Fortum, that talks a lot about Cleantech, want to get its hands dirty with fossil fuels the life and soul of Uniper?

Even today, several years later, as a majority owned Fortum company, Uniper still has no qualms about their future in fossil fuels because they proudly present the following diagram on their website. They have a plan to reduce emissions in Europe by 2035, but it is not exactly clear if this will be achieved, and there is very little written about their plans to reduce their emissions in Russian:

Fortum cries out on their website that they will be “Greener” and “More Sustainable”. When they purchased Uniper’s shares, they stated that the investment in Uniper was justified because Uniper’s profits would drive their future investments in Climate Change transition. However, the immediate effect of the acquisition is that Fortum have considerably more fossil fuel business activities and a lot more risk centred in Russia! Furthermore, Uniper is one of the partners in the NordStream pipeline that will, if finished, be delivering fossil fuel gas from Russia to Germany for many years to come…

Fortum used to own a part of Gasum, another Finnish company whose main business has been buying and selling Russian gas. Fortum sold their shares in Gasum to the Finnish government and bringing government ownership now to 100%. Gasum has been the traditional partner for Russian gas supplies that are piped to Finland where it is used by companies, transport and households. This source now has been supplemented by a new LNG terminal and a new pipeline with Estonia. This too would have been an Alice in Wonderland story too had it not been changed by Gasum making serious efforts to handle the challenges of climate change. They are now clearly trying to escape from their historical roots. 

Part of the Gasum strategy is aimed at developing the Nordic gas market and at operating in risk management and trading of emission allowances, and electricity guarantees of origin (meaning renewably produced electricity). Their portfolio management services provide access to the best possible power prices with long term contracts where they can even participate in trading on behalf of their wholesale customers and tap into market opportunities. One such example is an interesting long term contract between several state owned and private companies. Gasum is standing in between Stena Renewable, an owner of a wind farm in Sweden and Borealis. Even though this is a good deal, the public sector connections between all three parties is really curious…

Borealis is a big provider of polyolefin, one of the most popular plastics, as well as base chemicals, fertilisers and the mechanical recycling of plastics. It is owned by OMV, another fossil fuel company owned by Austrian State and the Abu Dhabi National Oil Company based in UAE, yet another state-owned fossil fuel company. Stena Renewable invests renewables and is jointly owned by the Swedish investment company Stena Adactum, the Swedish pension fund AMF, and the Norwegian municipal pension fund KLP. Public sector bodies are in abundance in clean energy solutions and that is useful.

However, this column still has a long ending. There is a third energy company where the Finnish government also has a big shareholding (some 36%) called Neste. They were created to refine crude oil from Russia and a few other places into fuels and plastics for transport, aircraft and consumer plastics. When you look at their website today coloured with a nice shade of blue the words “RENEWABLE” shout at you – “Renewable Road Transport, Renewable Aviation, Renewable Plastics”. 

It is a bit much for a company whose main business is to refine crude oil mixed in with palm oil and some other bio-oils as additives. The problem with bio-oils is that palm oil is not a genuine sustainable renewable source because rainforests are destroyed. Neste claims that their sources are sustainable, but there is nothing sustainable about these plantations. They also use soyabean oil and other bio-oils like rapeseed oil, both of which use farming land that is needed for food. They are not sustainable nor the right solution for transport. All three sources reduce bio-diversity, destroy rain forests or use arable land that should be used for food production. Their refineries are huge sunken costs that pollute just like the pumping of crude oil from oil sands and underground. The transportation of  these raw materials is also a danger to the ocean and coastal waters. Plastics made from these material are poisoning our oceans, lakes and rivers with micro particles.

Finland has a history of relying on fossil fuels like the rest of the world. The transition from fossil fuels to renewables is challenging but we must be happy that some progress is at last taking place, albeit at a snails pace. 

Some ten years ago the government supported the construction of two new nuclear plants that are already significantly behind schedule, and one of these projects is involved in a very costly legal argument. Based on today’s relative costs of nuclear versus clean energy solutions, they are not cheap solutions in absolute terms. Battery technology like wind and solar power sources have become more cost efficient. Nuclear can best be described as a white elephant, with the serious environmental issue of spent nuclear waste that will be dangerously radioactive for thousands of years… 

Finland is a Nordic country that has plenty of forests and minerals on and in its land. It needs to harvest and refine these materials and sell them in the global markets as well as maintaining a clean and healthy land. Past dependence on fossil fuels and nuclear energy have worked well to provide cost effective energy but now the time has come for change towards a strong reliance on renewables. Readers will have read here in FinnishNews about the Danish solution for their energy transition. Much more needs to be done here in Finland by these three companies and others if we want to maintain a strong clean and healthy land, or we too will be frozen in time like the Mad Hatter’s Tea Party.

Illustration: Alice at the Mad Hatter’s tea party — Illustration to the fifth chapter of Alice in Wonderland by John Tenniel. Wood-engraving by Thomas Dalzie

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